The Operator Pulse | Q2 2024
The Operator Pulse provides quarterly commentary on the membership industry through the lens of major economic forces to give you the broader context and insight needed to be the smartest membership operator in the room.
New summaries will be added quarterly.
The Landscape.
During Q2 2024, membership products continued to perform well. A continued trend of revenue expansion remained intact from Q1, however, membership operators observed higher rates of member churn during July.
The consumer is showing signs of optimism as tight macroeconomic conditions resulting from higher interest rates and inflation have the potential to loosen as we head into Q3 and Q4.
Membership operators are also optimistic heading into the second half of 2024. Operators are expecting acquisition to rise from current levels during Q3 which is typically a strong quarter for membership across the board.
Membership Performance.
Even though consumers remain cautious about subscription products, we saw strong annual renewal rates during Q2. Historically, this is a sign that strong performance of monthly and quarterly plan renewal rates are soon to follow.
Notable trends observed during Q2 were:
An increase in 1-Month retention among members purchasing monthly memberships for the first time
An increase in the overall number of annual memberships sold. Annual memberships represented approximately 62% of all memberships purchased by first-time members
An increase in global member churn of 2.5% compared to Q1.
Global Membership Metrics.
Acquisition: The average membership saw an uptick in acquisition to the tune of 12% Year-over-year (YoY)
Churn: The average membership saw an average churn increase of 1.8% YoY.
Revenue Growth: The average membership saw stable revenue growth during Q2 of 6.4%. This is a result of operators continuing to leverage Retention Discounts and well-defined email funnels to convert free subscribers into paying subscribers.
Member Tendencies.
Members continue to renew annual memberships at a strong rate. The average membership saw annual renewal rates of 56% during Q2 2024. Memberships designed to prioritize long-term member relationships are performing extremely well.
Members were also slightly less engaged during Q2, as expected. The summer season consistently sees lower member engagement across the board.
Members continue to respond well to offerings that include quarterly and annual plans, especially when paired with promotional discounts.
The strongest-performing promotional discounts were:
First month free for monthly membership purchases
First year 40% off for annual membership purchases
As noted last quarter, at the highest level, members continue to value personal communications and connections. Membership operators who frequently communicate from a founder’s perspective and those striking a personal tone continue to see the lowest rates of member churn.
Outlook.
Q3 is set to be strong for membership operators. As consumer tendencies, priorities and schedules normalize outside of the summer season, we expect to see increased membership activity across the board during Q3.
There’s also an increased possibility that wee see tight macroeconomic conditions begin to loosen during Q3, and especially Q4. A decline in interest rates could spur an increase in consumer confidence and spending at the macro level which will quickly trickle down into membership products.
Moves to Make Right Now.
As a membership operator, now is the time to prepare for an uptick in membership activity during Q3 and Q4.With an expected increase in overall interest and purchasing tendencies within the membership industry, this is an opportunity to ensure:
Your website is current and looks its best
Any promotions you plan to run during Q3 are mapped out and ready to launch
You have an email funnel in place to capture free leads and convert them into paying subscribers during the second half of the year, as email open rates are significantly higher during the months of September - December
